By Max Sato
(MaceNews) – Japan’s economic rebound in the April-June quarter was firmer than expected as business investment in upgrading factories and offices turned out to be stronger than previously reported, Cabinet Office data released Wednesday showed.
Revised second quarter GDP data confirmed that consumer spending remained resilient despite on-and-off restrictions on economic activity during the pandemic.
Looking ahead, however, a resurgence in coronavirus cases in many parts of the world is clouding global and domestic growth prospects. Japan’s household spending was lackluster in July, posting a weaker-than-expected 0.7 rise form a year earlier and marking the third straight month-on-month decline, down 0.9%, data released Tuesday showed.
Bank of Japan board member Toyoaki Nakamura told a news conference last month that he believed the spread of the pandemic, which has prompted the government to expand the areas under restrictions, is now delaying the timing of more active consumption in a safer health environment until year-end or spring breaks from summer holidays.
Q2 GDP Upward Revision Stronger Than Forecast
Gross domestic product rose a real 0.5% on quarter, or an annualized 1.9%, in the second quarter, revised up from the initial estimate of 0.3% growth, or 1.3% on an annualized basis. A rebound in capital investment was stronger than initially estimated last month, offsetting a larger drawdown in private inventories and weaker public investment.
The revised GDP figures came in firmer than the median economist forecast of a 0.4% increase (+1.6% annualized).
But the rebound in April-June covered only about a half of a 1.1% slump (annualized 4.2%) in January-March. GDP rose 2.8% on quarter, or an annualized +11.9%, in October-December last year after surging 5.3%, or an annualized +23.2%, in July-September, which was the fastest growth under the current GDP formula dating to 1994.
From a year earlier, total domestic output grew 7.6% (revised up from the initial reading of a 7.5% rise) in April-June, posting the first quarter of year-over-year increase after falling 1.3% in the previous three months. The contraction was deeper at 5.5% in July-September and 10.1% in April-June of 2020, when the first wave of coronavirus infections caused a plunge in demand around the world.
Other details from revised (second preliminary) Q2 GDP data
In Q2, domestic demand raised total domestic output by 0.8 percentage point (revised up from a 0.6 point gain) after trimming Q1 GDP by 0.8 percentage point.
Net exports (exports minus imports) pushed down Q2 GDP by an unrevised 0.3 percentage point after pushing down Q1 GDP by 0.2 point, the second consecutive quarter of decline. Global chip shortages have forced automakers to cut production and shipment while an earlier recovery in energy and commodities markets led to higher import costs.
Exports of goods and services rose a revised 2.8% on quarter in April-June after rising 2.4% in January-March. The pace of increase decelerated from a 11.7% jump in the final quarter of 2020. Imports gained a revised 5.0% after rising 4.0% the previous quarter.
Private consumption, which accounts for about 55% of GDP, rose 0.9% (revised up from a preliminary 0.8% rise) on quarter in April-June, after falling 1.3% in the previous quarter. It made an unrevised positive contribution of 0.5 percentage point to the second quarter growth.
Business investment rebounded 2.3% (revised up from the initial reading of a 1.7% rise) on quarter in Q2, after slipping 1.3% in Q1 and rising 4.3% in Q4. Its positive contribution was revised up to 0.4 percentage point from 0.3 point.
Private sector inventories made a negative contribution of a 0.3 percentage point (revised down from a 0.2 point drop) to April-June GDP, following a positive 0.4 point contribution in the previous quarter.
Public investment fell a revised 1.7% (initially a 1.5% decline) on quarter in Q2 after recording the first quarter-over-quarter decline in Q1 (-1.1%). It made an unrevised negative 0.1 percentage point contribution to overall output.
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Contact this reporter: max@macenews.com.
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